Encouraging advertisers to treat their affiliate marketing programs appropriately I’ve always said: “They are serious marketing campaigns and must be treated with all seriousness.” To prove affiliate marketing’s “seriousness” a good starting point would be an analysis of the ROI it yields.
Yesterday my “in UK affiliate marketing’s ROI is £11 to every £1 spent” Tweet picked up really well, but since it quoted British stats, I decided to also analyze (and bring you) the U.S. data to which I have access.
I sat down and took a look at 9 different affiliate programs that AM Navigator manages in the United States (we manage international ones too, but here we focused specifically on US-based ones) across 5 affiliate networks: Commission Junction, LinkShare, eBay Enterprise Affiliate Network, ShareASale and WebGains.
For the calculation of my basic ROI I have used the following formula:
Affiliate Program ROI =
Gross Net Sales – Advertiser’s Investment) ÷ Advertiser’s Investment
The “Advertiser’s Investment” was calculated as a sum of affiliate commissions and affiliate network’s fees.
And here are the results that I’ve arrived at:
Program #1 (CJ): $6.43
Program #2 (CJ): $14.09
Program #3 (CJ): $5.64
Program #4 (SaS): $7.33
Program #5 (SaS): $7.33
Program #6 (SaS): $5.94
Program #7 (SaS): $7.13
Program #8 (WG): $6.99
Program #9 (EEAN): $7.28
Average ROI: $7.15
Obviously, my Sample was fairly small, and I did not factor in Customer Lifetime Value, or Profit Margins, but even by looking at the above numbers one can get a pretty good idea of the ROI range to expect, with an average being $7.15 net brought in per every $1 spent.
If you run an affiliate program, and can share your ROI via the “Comments” area below (anonymously is fine), I would highly appreciate it. I know my readers would do as well.
It would be especially interesting to also get network level data on this. Regardless of the affiliate network’s size, they can easily perform a network-wide analysis, coming up with an across-the-board ROI number. This can further help validate the viability of affiliate marketing as a powerful way to advertise online (and even offline).